Earnings: Yahoo: Net Income Down 78 Percent; Will Cut Five Percent of Work Force

Hammered by a weak online advertising market, Yahoo (NSDQ: YHOO) reported steep drops in net income and revenue during the first quarter and, as expected, announced another wave of layoffs — this time, five percent of its workforce.

Results were largely in line with expectations. The company posted net income of $118 million ($0.08 per share), down 78 percent from the $537 million ($0.11 per share) recorded during the same period a year ago. Revenue for the company’s first fiscal quarter dropped 13 percent to $1.58 billion, from $1.8 billion a year ago. On average, analysts had expected earnings per share of $0.08 cents and revenue of $1.63 billion.

As of March 31, Yahoo had 13,500 employees — so the latest round of layoffs could mean that as many as 675 Yahoo employees will lose their jobs.

Some highlights:

Revenues from owned and operated sites: Yahoo said that a three percent decrease in search advertising and a 13 percent decrease in display advertising led revenue at its own sites to drop 10 percent to $872 million. Analysts on average had expected a 17 percent drop in display revenue and a one percent drop in search revenue.

Revenue from affiliate sites: Revenue from affiliated sites dropped 16 percent to $511 million, compared to the same period a year ago.

One-time revenue hits: Yahoo said that its revenue had also been negatively impacted by the sale of Kelkoo and lower fees revenues from broadband partnerships, VOIP services and subscription music offerings.

More cuts ahead?: In addition to laying off five percent of its workforce, the company also said it would “continue to implement non-headcount cost reductions.”

Earnings Release (pdf)| Webcast | Slides